Germany's SPD says grand coalition 'not automatic'

German Chancellor Angela Merkel attends the 5th African Union- European Union summit in Abidjan Ivory Coast

Schulz was speaking after attending a meeting with Chancellor Angela Merkel and her Bavarian ally Horst Seehofer with President Frank-Walter Steinmeier late on Thursday that aimed to end political deadlock in Europe's largest economy. "That's exactly what I will propose the party leadership on Monday", he said.

After September's election left the veteran leader without a majority and the SPD with a historic low score, the labour party firmly rejected ruling again Merkel's shadow.

Schulz said he had telephoned the CDU leader to say that any such claims from her conservatives to the media would be viewed as "a breach of trust".

"We have many options for forming a government".

Ahead of that congress, which will also decide whether to re-elect Schulz as chief of the SPD, the party's top brass has been careful to tread softly regarding its options.

Schulz said reports to that effect were the result of leaks from the conservative sources, adding that he had called Merkel to complain about the confidentiality of Thursday's meeting being violated.

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Meantime, she continues to head a caretaker government made up of her conservatives and the Social Democrats.

"The fact that we underlined today that we are prepared to enter such talks with the SPD shows that we're aiming to bring these talks to a successful conclusion", he added.

"Another senior member of Merkel's Christian Democrat Union (CDU), Mike Mohring, said he was hopeful for an eventual grand coalition and expected a new government to be formed by March".

"A positive answer to (the reform proposals of French President) Emmanuel Macron will be a core element of any negotiation with the SPD", the SPD leader said.

Germany's Bild newspaper and the news agencies Reuters and DPA reported earlier on Friday that a deal had been reached to pursue the grand coalition option.

"Giving Emmanuel Macron a positive answer will be a key element in every negotiation with the SPD", Schulz was quoted as saying in the interview made available on Friday, adding that he also backed a joint European Union tax policy.

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